Client audit files require specificity

A specialist superannuation lawyer has recommended auditors keep specific audit files of each client that can be easily accessed and not rely on the premise records being kept in an all-of-office environment constitutes proper professional documentation.

DBA Lawyers special counsel Bryce Figot noted this fact was one of the learnings from Sidhu and ASIC (Australian Securities and Investments Commission), in which the applicant argued if an auditor keeps a client file within the business premises, they have satisfied the requirements of Auditing Standard ASA 230, which dictates what constitutes appropriate documentation.

A specific exchange with ASIC saw David Sidhu argue he was deeming an audit file as being you walk through the door and now the file is the whole office, meaning the work file consists of the entire office and not a singular document.

“When pressed he did have to retreat from that [position] and he said ultimately ‘I acknowledge that was a breach of ASA 230’,” Figot told attendees of an Auditors Institute webinar held today.

“So people watching today if I was to go to your office and say give me the file for any of the 100, 1000 or however many SMSFs you’ve [serviced] over the last one or two years, could you just basically instantly hand over the entire file to me?

“Because that is the standard you should be aiming for.

“If you say ‘well I’ve got a bit [of the client’s information] here and a bit there’, [that won’t suffice]. [so if you say:] ‘Once you walk into my office, basically the whole office, or maybe my whole [computer] server, or cloud computer, or what not, is the file,’ [that won’t work].

“[A client file] has really got to be ideally, [and] you’ll be up against it otherwise, in one location so if someone wants it, such as the ATO, you can say bang, here it is. It’s all in one folder.”